HR assignment help analysis on: Performance measures 

Why it is important and how to implement performance measures in supply chain?

As per Holmberg (2000), the importance of performance measurement systems is the following:

1. Performance measures are important to control the activities in the organization, this helps to create a well performing organization
2. A few of the important measurement tools can help the organization to achieve the supply chain management improvement
3. They allow the organization to focus on those activities that can actually help in the improvement of the organization as focusing on activities that are not important for the organization can result in dire consequences
4. They help he organization to be pro active rather than finding the solution to something after it has occurred.

As per Neely (1998), the execution of a performance measurement system is a difficult task that needs the participation of all parts of the organization, and thus makes the system an effective one rather than one which is just implemented and not followed. In the starting when the strategic goals of the supply chain has been understood and it’s essential to define the metrics that best suit the objectives and connect them with company information systems. There are multiple ways in which an organization can implement the various available performance measures including:

Pilot testing:

According to Lee (2004), the first way of implementing the performance measures is to form a pilot testing program where such measures are implemented in a small part of the organization and then utilizing the same to improve upon the total performance of the organization and help them to understand the changes in the total system of the organization that shall be changed after they have been understood in the actual workings of the organization.

Example:

An example of such a pilot testing system was the changes that were brought forward by Wal-Mart, the retail giant, where they implemented the RFID solution in the supply chain of the organization. They used radio frequency tags on their products to be able to identify them with ease and with correctness. Such a system allowed them to reduce the lead time and the excess inventory that they used to have earlier. This system was first implemented in a pilot test scenario in the US facilities of the organization. This can be termed as one of the most successful forms of pilot testing implementation.

Phased Implementation:

According to Kaplan and Norton (1996) another form of implementation of the organizations performance measurement system is the phased implementation of the system in the organization this can be done through the implementation of the system in one part of the organization and then understanding the complications in the implementation and the performance of such a system. For example such a system can be implemented in the manufacturing floor and then it can be observed. Another example of an implementation of the system can be implementing it in the marketing department which forms an ad hoc part of the supply chain. The observations there can be further used to implement such a system in the more important parts of supply chain. The organization should have the fall backs in place to ensure that in case the system does not work in the correct manner than they have something to fall back upon. An actual example of such an implementation is

Straight implementation:

Another form of the implementation of the systems of performance of the supply chain management is the complete implementation of such a system in one go. However such a decision is not fraught with dangers. This can be proved by the fact that when the organization implements such a system in one goes the performance of the organization can be affected as there can be problems by the employees to understand the systems that has been put into place. As per Kotter and Heskett (1992), this can result in higher cycle times, higher inventory levels, decreased customer satisfaction levels and the result o which there can be increase in costs and a decrease in the profits of the organization. Thus such a system has to be implemented at one go only after a lot of thought process by the organization.

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